On this , you'll find posts from a half dozen or more people complaining about these blurred photos. other report the same symptom and have posted blurry photos to prove their point.
This seems like a simple case of a bug in the iPhone software. What makes it less simple, however, is that it can be hard to reproduce the bug. Initially, I tried several times, starting with photos in my iPhoto library, and could never duplicate the symptom. I even resized photos, to conform to dimensions that supposedly trip the bug. Still no problem. The above-cited Apple Discussions thread includes several posts from people who similarly have never seen this symptom.
There was one way I was finally able to wind up with a blurry photo: Start with a photo taken by the iPhone's own camera (which is a 1,200-by-1,600 pixel image), send that to myself via e-mail and then save the e-mailed image back to my Camera Roll. The resulting photo (which is now a 600-by-800 pixel image) is blurry when viewed in the Photos app. Oddly (as others have also reported), if I import the blurry photo directly to my Mac, by connecting the iPhone and using Image Capture, the photo is not blurry on my Mac.
In other words, the problem is with how an image displays in the iPhone's Photo app, not with the image itself. Further, the problem seems limited to certain resolutions (600-by-800 being one of them), but not others. It remains unclear (at least to me) exactly why only certain resolutions are affected--although it appears to be related to how the images are scaled to fill the iPhone screen. What is clear is that this will be an annoying problem for anyone that attempts to e-mail an iPhone photo to another iPhone user.
So far, there isn't any work-around to avoid the bug. I assume it will require an update from Apple for this to be resolved.